Chapter 4 - Consensus Flashcards
Consensus
A contract will only come into existence if the parties are in agreement on the rights and duties created by their agreement
- it is the most important requirement for a contract
3 Requirements
- every party must intend to be contractually bound
- parties must have common intention
- every party must make his/her intention known
How is consensus reached?
1- serious intention to be contractually bound
2- have common intention
3- declare each other’s intention
Intention to be contractually bound (duties)
A moral duty with no legal basis e.g social arrangement
A legal duty with a legal basis for breach of contract. Eg employment contract
Common intention
The parties must have common intention to contract with each other and
Must intend to create the same legal relationship
Make intention known
There must be a mutual awareness of other parties intention either (orally, writing or conduct)
Most common method to determine consensus is to look for offer and acceptance
Define Offer
An offer is an declaration made by an offeror
They indicate intention to be contractually bound by mere acceptance of the offer
Offeror sets out the rights and duties he/she wants to create
6 Requirements for an offer
Complete
Clear and certain
Communicated
Expressly or tacit
Offer must be binding
Addressed to the general public or a definitive
When does an offer fall away?
- after expiry of a certain time period
- after offeror informs offeree the offer is withdrawn/revoked
- if offeree rejects the offer
- if the offeree makes a counter offer
- the death of either offeree or offeror before acceptance
Acceptance
An expression of intent by the offeree
What makes an acceptance valid
- Unconditional
- Unequivocal
- Consciously accepted by the person to whom it was addressed
- It must comply with legislation if applicable
- when parties contract a at a distance questions marise of when and where acceptance takes place on
Acceptance theories
They conclude when arms where an offer takes place:
Information theory
- telephone/fax same as if in person
Expedition theory
- when sent through services like postal service
Reception theory
- electronic agreements, at the time when and at the place where.
Factors that influence consensus
Mistake
Misrepresentation
Undue influence
Duress
- misunderstanding with the effect that it does not correspond with the will of the other party- error
- one party induces the other party to enter into a contract through duress
- one party mislead the other into entering into the contract
In some cases these contracts will be rendered r voidable
Effect on contract
Mistake - void
Misrepresentation - voidable
Undue influence - voidable
Duress- voidable
Mistake
Renders a contract void as there is an absence of consensus.
Categories of mistake
Unilateral mistake - only one of the parties was mistaken, while the other was aware
Mutual mistake - a situation where both parties are mistaken about each other’s intention and are thus at cross-purposes
Common mistake- does not lead to disagreement but leads to a contract being void due to underlying supposition
What makes a mistake plausible?
A mistake must have influenced a parties decision to conclude a contract to be relevant.
Material mistake
An error that negates actual agreement between parties because it relates to an element of concensus.
Non material mistake
An error that does not exclude actual agreement between parties because it does not relate to an element of concensus.
Historical categorisation of mistake
Error in corpore - this is a material mistake that concerns the contracts subject matter
Error in negotio - this is also a material mistake and concerns the nature of the contract
Error in persona - this is a mistake regarding the identity if the other party to the contract. The courts only regard this a material mistake if it is of vital importance to the mistaken party.
Error in substantia - mistake regarding an attitude of the contacts subject matter, generally not regarded as material.
Mistake Types
Motive
Law
Name
Mistake as to the motive of entering into a contract is not regarded as material
Mistake of law not material if it relates to motive
Error in name is not regarded as material
-still contracting with the correct parties
Misrepresentation
A false statement of past or present fact, not law or opinion, made by one party to another, before or at the time of the contract, concerning a matter of circumstance relating to it.
Misrepresentation classification :
Fraudulent
Negligent
Innocent
Irrespective of classification( fraudulent, negligent or innocent) a party is entitled to restitution if the misrepresentation:
Was made by the other party
Made with the intention of inducing a contract
Was material
How can misrepresentation be made?
Words , conduct or even silence.
Silent misrepresentation occurs when a party fails to disclose a material fact in circumstances where there is a legal duty to do so.
Intentional misrepresentation
- fraudulent misrepresentation
Made by a person who knew the statement was untrue or who did not honestly believe in the truth of the statement, no matter if it’s right or wrong.
The deceived party claim damages, whether they decide to proceed with the contract or not.
Claim for damages is not a contractual claim but one of delict (violation of the law)
Aim of claiming for damages: to put the party in a position as if the intentional deception had not occurred.
Negligent misrepresentation
When a statement is made negligently with the aim of inducing the contract
Does not aim to make a false statement
The party genuinely believes the statement is true but fails to take the necessary steps a reasonable person would in those circumstances to satisfy themselves that the statement is true.
No actual duty is done to check accuracy of statement
Deceived party can claim damages under delict to place ever them in a position as if the deception did not occur.
Innocent misrepresentation
Statement was made without intent or negligence
But made with intention of inducing a contact
No claim for damages only allowed to abide of cancel the contract.
Duress
Improper pressure that may amount to intimidation. The coercion of will.
Contract if voidable when
- physical violence, reasonable fear and or damage
- threat must be imminent/inevitable
- threaten must be unlawful
- duress must be by one party on the other
- MUST cause conclusion of a contract
Undue influence
Also a form of Improper pressure on a party to force him/her to enter into a contract but is more subtle than duress
The undermining of the will of the other party. A relationship where one party abuses a superior position to influence the other.
Persuasion to conclude a contract
Contract is voidable when :
Party has influence
Used to weaken victims ability to resist
Party uses influence to persuade the victim to consent to a contract he would have done out of free will.
